URC raises P7.44B from treasury shares

MANILA, Philippines - Universal Robina Corp. (URC), the food and drink manufacturing arm of the John Gokongwei family, has raised P7.44 billion from the sale of treasury shares to institutional investors.

In a disclosure to the Philippine Stock Exchange, URC said it sold 120 million common shares previously held as treasury shares at P62 each or a 4.8 percent discount to the previous closing price and a 2.3 percent discount to the 30-day volume weighted average price.

The shares were crossed through a special block sale at the PSE yesterday.

CLSA Ltd. acted as sole bookrunner and sole placing agent for the sale.

URC said proceeds from the share sale will be used to fund potential acquisitions and for general corporate purposes.

The company has been expanding its footprint overseas and will soon open a new factory in Burma. Its international operations currently account for about a third of its business and is seen to grow as big as its domestic operations in around five years.

For this year, URC has set a capital spending of P5.2 billion, 14 percent higher than the P4.56 billion spent a year before. Majority of the capital budget, or 80 percent, will be used for the continued expansion of its branded consumer foods segment operations — primarily snack foods production facilities in the Philippines and biscuit factories in its two biggest markets, Thailand and Vietnam.

The remaining 20 percent of the capex will go to the construction of a $27-million bioethanol plant at URC’s sugar milling complex in Negros Occidental.

Bioethanol is a form of renewable energy intended to provide a more environmentally and economically friendly alternative fossil fuels such as diesel and gasoline. It can be made from very common crops such as sugarcane, potato and corn.

The bioethanol plant, which will churn out 100,00 liters of fuel a day, is projected to contribute a little over one percent to company’s revenues.

URC grew its net earnings in the first half of its fiscal year ending September 2012 by 36.5 percent to P4.48 billion due to significant improvement in market values of bond and equity holdings and lower foreign exchange loss from foreign currency-denominated transactions.

Sales rose 6.6 percent to P35.49 billion while core sales went up 13 percent.

URC is involved in a range of food-related businesses, including the manufacture and distribution of branded consumer foods, production of hogs and day-old chicks, manufacture of animal and fish feeds, glucose and veterinary compounds, flour milling, and sugar milling and refining.

The branded consumer foods segment manufactures and distributes snack, chocolate, candy, biscuit, bakery, beverage, noodles and tomato-based products.